Vedanta Ltd Sees Surge in Put Option Activity Amidst Bullish Price Momentum

Robust Price Performance Contrasts with Elevated Put Option Interest

Vedanta Ltd. (NSE: VEDL) has been on an impressive upward trajectory, hitting a new 52-week and all-time high of ₹754 on 29 January 2026. The stock has outperformed its sector peers, gaining 2.32% on the day and outperforming the Non-Ferrous Metals sector by 0.88%. Over the past six consecutive trading sessions, Vedanta has delivered a robust 12.02% return, reflecting strong investor confidence. The stock currently trades comfortably above all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – underscoring the sustained bullish momentum.

Despite this positive price action, put option activity has surged significantly, indicating a complex market sentiment where investors are either hedging existing long positions or speculating on a potential near-term correction.

Put Option Data Highlights Bearish Positioning

Analysis of the most active put options for Vedanta reveals heavy trading volumes clustered around strike prices of ₹680, ₹690, and ₹700, all expiring on 24 February 2026. The ₹700 strike put option leads with 3,883 contracts traded, generating a turnover of ₹705.09 lakhs and an open interest of 3,234 contracts. This is followed by the ₹690 strike with 2,757 contracts traded and a turnover of ₹430.88 lakhs, and the ₹680 strike with 1,938 contracts traded and a turnover of ₹252.73 lakhs.

The underlying stock price at ₹754.5 places these strike prices comfortably out-of-the-money, suggesting that traders are positioning for a potential downside move of approximately 7% to 10% over the next month. The elevated open interest at these strikes further confirms that these are not merely speculative trades but likely represent strategic hedging or bearish bets.

Expiry Patterns and Market Implications

The 24 February 2026 expiry date is critical as it falls just under a month from the current date, providing a near-term horizon for these option positions. The concentration of put option activity at strikes below the current market price indicates that investors are preparing for possible volatility or a pullback in Vedanta’s share price, despite the prevailing bullish trend.

This divergence between strong price gains and rising put option interest is often observed in large-cap stocks where institutional investors seek to protect profits or hedge against sector-specific risks, such as commodity price fluctuations or regulatory changes impacting the Non-Ferrous Metals industry.

Fundamental and Technical Context Supports Cautious Optimism

Vedanta Ltd. remains a large-cap heavyweight with a market capitalisation of ₹2,88,235 crores, classified under the Non-Ferrous Metals industry. The company boasts a strong MarketsMOJO score of 75.0, with a current Mojo Grade of Buy, recently revised from a Strong Buy on 13 January 2026. This slight downgrade reflects a more cautious stance amid recent price gains and elevated option market activity.

The stock’s dividend yield stands at a healthy 3.12%, adding to its appeal for income-focused investors. Liquidity remains robust, with the stock capable of handling trade sizes up to ₹31.15 crores based on 2% of the 5-day average traded value, ensuring smooth execution for institutional trades.

However, investor participation has shown signs of moderation, with delivery volumes on 28 January falling by 13.87% compared to the 5-day average. This decline in delivery volume may indicate some profit-booking or cautious positioning ahead of the February expiry.

Sector and Broader Market Dynamics

The Non-Ferrous Metals sector has gained 2.48% recently, slightly outperforming the Sensex, which declined by 0.48% on the same day. Vedanta’s 1-day return of 2.22% closely tracks sector performance, reinforcing its role as a bellwether stock within the industry.

Given the sector’s sensitivity to global commodity prices, currency fluctuations, and geopolitical developments, the increased put option activity may also reflect hedging against external risks rather than purely bearish sentiment on the stock itself.

Investor Takeaway: Balancing Bullish Momentum with Risk Management

For investors, the current scenario presents a nuanced picture. Vedanta’s strong price momentum and sector outperformance suggest continued upside potential, supported by solid fundamentals and a favourable dividend yield. However, the surge in put option volumes at strikes below the current market price signals that market participants are actively managing downside risk.

Those holding long positions may consider protective strategies such as buying puts or employing collars to safeguard gains, especially given the proximity of the February expiry. Conversely, traders with a bearish outlook might view the elevated put interest as confirmation of potential near-term volatility, possibly positioning for a correction in the ₹680-700 range.

Overall, Vedanta’s option market activity underscores the importance of a balanced approach, combining bullish conviction with prudent risk management in a sector characterised by cyclical swings and external uncertainties.

Looking Ahead

As the 24 February expiry approaches, close monitoring of open interest changes and price action around the key strike prices will be crucial. Any significant unwinding of put positions or shifts in open interest could provide early signals of directional bias. Additionally, macroeconomic factors such as commodity price trends, currency movements, and regulatory developments will continue to influence Vedanta’s stock trajectory and option market dynamics.

Investors and traders alike should remain vigilant, leveraging comprehensive research and market intelligence to navigate this evolving landscape effectively.

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